AP Reaches Tentative Labor Deal

NEW YORK — The Associated Press has reached a tentative agreement on a labor contract that the news cooperative says would provide financial stability during a time of media upheaval.

The deal announced Friday follows six months of negotiations and would cover about 1,200 newsroom and technology employees represented by the News Media Guild.

The main dispute involved management's insistence on freezing a longstanding pension plan, in which monthly payments in retirement are defined. Future retirement contributions would instead go into an employee-controlled account similar to a 401(k). The union ultimately agreed to the pension freeze, and the company said it would increase contributions to the alternative plan for affected employees for eight years.

In return for the freeze, the AP also agreed not to seek an increase in employees' health insurance payments. Employees would get three raises of 1.5 percent each and improved job security. The contract would cover 33 months and expire at the end of August 2013.

The tentative agreement comes after several years of financial hardship for many of the newspapers and broadcasters that receive AP's services. Newspapers have been the hardest hit as billions of dollars in advertising revenue has shifted to less expensive alternatives on the Internet. The turmoil has triggered layoffs and pay cuts at many newspapers.

Those troubles have led the AP to lower its fees for U.S. newspapers and broadcasters by $80 million during the past two years. The fee reductions are one reason the AP's annual revenue fell from $748 million in 2008 to $631 million last year. To save money, the AP has reduced its payroll from nearly 4,300 employees in 2008 to about 3,560.

AP sought the pension freeze to help lower its costs in the future and make up for a more than $100 million shortfall in the plan.

"These were very difficult talks, covering difficult topics in uncertain economic times," said Jessica Bruce, the AP's vice president of human resources. "With this agreement now in place, AP and its staff can now focus their attention and energy on the initiatives critical to driving revenue so that AP can stay competitive and maintain its leadership in the media marketplace."

The agreement came after the union threatened to file allegations of unfair labor practice and management threatened to withdraw several proposals.

Tony Winton, the president of the News Media Guild, said the union felt the deal was the best possible without going on strike. A formal strike vote was never taken during the talks.

"This was the most challenging bargaining we have ever had with the AP," Winton said. "Our membership showed tremendous courage and unity."

The union hopes to schedule a vote in time for the new contract to be ratified by June 1.

If the contract is approved, the pension plan would freeze guaranteed monthly retirement benefits at the amounts earned through June 30.

Future retirement contributions would go to a plan that shifts the responsibility for retirement planning and investing to workers. Contributions are defined but benefits are not. Such a plan is similar to a 401(k).

The AP already had stopped offering the traditional pension plan to management employees hired since 2005 and union-covered employees since March 2006. Those newer employees receive 3 percent of salary in the defined-contribution plan. All employees are also eligible to participate in a 401(k) plan. For union employees, the AP contributes up to 3 percent of salary to a 401(k).

The new agreement would eliminate the 401(k) match for union-covered employees. The AP would contribute 6 percent of salary to the defined-contribution plan. That would allow employees to receive the maximum contribution even if they don't contribute to the 401(k).

Besides the 6 percent, employees affected by the pension freeze would get an additional contribution of 1 percent or 2 percent of salary to the defined-contribution plan over the next eight years, depending on how long they have been with the company.

The union said the pension freeze would affect about 950 of the 1,200 covered by the new agreement.

Some newspaper companies have frozen traditional pension plans as they try to overcome a sharp drop in revenue. Gannett Co., owner of USA Today and more than 80 other daily newspapers, froze its pension plan in 2008. McClatchy Co., publisher of The Sacramento (Calif.) Bee, The Miami Herald and 28 other daily newspapers, did so in 2009.